DUET’s interim net profit falls 36pc

Energy utility investor
DUET Group
posted a 35.9 per cent drop in first-half net profit to $60.6 million, after an increase in interest costs, depreciation and amortisation charges and on costs associated with a debt refinancing.

The fund signalled a delay to its closure of a key deal to sell its US asset, a
stake in US utility Duquesne. It now expects completion of the deal by the end of the 2011 financial year, providing it gets the US regulatory approvals it needs. When DUET unveiled the deal, it expected completion by the end of March 2011.

The fund plans to use the proceeds of $346 million to pay down corporate debt. But some in the market expect DUET to look to buy assets being sold by Brookfield Infrastructure Partners. DUET already owns a 60 per cent stake in the Dampier to Bunbury natural gas pipeline and 79.9 per cent of Multinet Group Holdings.

The delay in the sale “could make it more difficult for DUET Group to acquire the minority interests in DBP (Dampier Bunbury Pipeline) and Multinet Gas from Brookfield at potentially attractive prices", said Commonwealth Bank analyst Paul Johnston.

Once the Duquesne deal is closed, the fund will have only Australian assets, a move towards the simplification of a fund that is criticised for having an overly complex structure.

John Roberts, executive chairman of Macquarie Funds Group, will become DUET’s chairman from February 25, replacing Philip Garling, who will remain on the board. That day, David Bartholomew, currently the fund’s chief operating officer, will replace Peter Barry as chief executive, in a previously announced handover.

The fund’s closely watched proportionately consolidated earnings before interest, tax, depreciation and amortisation was $320.5 million for the six months to December 31, 2010, undercutting the $326.3 million expected by analysts that follow the company.
The fund made $304.9 million of proportionately consolidated EBITDA in the first half of the 2010 financial year.

In terms of outlook, the fund plans to “continue focus on improving the operating performance of its assets and selectively deploy capital to fund growth and capital management initiatives".